Resolution No. 107/2023/QH15 Issued by the National Assembly on November 29, 2023, this marks a significant milestone in the implementation of the Global Base Erosion Regulations (GloBE). The application of additional taxes under this regulation allows Vietnam to retain its taxing rights and ensure a transparent investment environment in accordance with international standards from January 1, 2024.
In the context of integration, Resolution No. 107/2023/QH15 is a key legal framework regulating the tax obligations of large multinational corporations (MNEs). Understanding the actual tax rates and filing deadlines is a mandatory requirement for accountants and auditors to effectively manage risks. Explore the details below to grasp the latest implementation roadmap.
Scope of application of Resolution No. 107/2023/QH15
Identifying the correct target group is the first step in complying with Resolution No. 107/2023/QH15. Not all FDI enterprises fall within the scope of regulation; the regulations focus only on "big players" with global financial influence to avoid dispersing management resources.
According to Article 2 of Resolution No. 107/2023/QH15, a constituent unit of a multinational corporation with consolidated revenue of at least 750 million EUR for at least two of the four consecutive years preceding the fiscal year will be subject to the regulations. This ensures a focus on corporations with strong financial capabilities and extensive operations.
| Criteria | Content of regulations | Legal basis |
| Type of organization | A constituent unit of a multinational corporation. | Article 2.1 |
| Revenue threshold | Minimum 750 million EUR | Article 2.1 |
| Duration | At least 2 years in 4 consecutive years | Article 2.1 |
| Actual tax rate | Lower than 15% | Article 4.4 |
In reality, Resolution No. 107/2023/QH15 directly impacts entities in Vietnam that are currently enjoying preferential treatment. corporate income tax This is lower than 15%. This requires tax professionals to carefully review the revenue structure and actual tax rate (ETR) to avoid errors during subsequent supplemental filing.
Tax exemption limits and thresholds according to Resolution No. 107/2023/QH15
Resolution No. 107/2023/QH15 stipulates exemption thresholds to reduce the compliance burden for small-scale entities. This is an important operational technique that accountants need to consider when preparing tax plans and financial reports for the parent company.
Regulations on minimum effective tax rates
When the actual tax rate is lower than 15%, businesses must pay the minimum domestic supplementary Corporate Income Tax (QDMTT). NResolution No. 107/2023/QH15 stipulates a calculation formula based on net profit and adjustments according to the GLOBE standard to determine the most accurate additional tax amount.
De minimis (small value) exemption threshold
According to Article 4.9 of Resolution No. 107/2023/QH15, the additional tax will be zero if the enterprise simultaneously meets the conditions regarding scale of operation: average revenue below 10 million EUR and average income below 1 million EUR or incurring losses. This regulation helps reduce pressure on small enterprises within the group.
Calculating these figures must be based on the average of the current fiscal year and the two preceding years. This requires absolute accuracy in recording accounting data and archiving documents in accordance with the spirit of Resolution No. 107/2023/QH15.
Regulations on tax declaration and payment according to Resolution No. 107/2023/QH15
Timely compliance is a key factor. Resolution No. 107/2023/QH15 sets specific deadlines for each type of tax return, ensuring that tax authorities have sufficient data for monitoring. Delays can lead to serious penalties under the Tax Administration Law.
Deadline for submitting QDMTT and IIR declarations.
Accountants need to clearly distinguish between Domestic Supplementary Tax (DBT) and Minimum Income Tax (IIR). Resolution No. 107/2023/QH15 stipulates the deadlines for filing tax returns and paying taxes as follows:
- For QDMTT: The deadline is no later than 12 months after the end of the fiscal year (Article 6.1).
- For IIR: 18 months for the first year; 15 months for subsequent years from the end of the fiscal year (Article 6.2).
Procedure for designating the declaration unit
In cases where a corporation has multiple units in Vietnam, Resolution No. 107/2023/QH15 allows for the designation of a representative unit to submit the tax return. The designation notification must be sent within 30 days from the end of the fiscal year. If the submitting unit changes, the notification period is 10 days (Article 6.3).
Transition period according to Resolution No. 107/2023/QH15
To support adaptation, Resolution No. 107/2023/QH15 establishes "Safe Harbours" by the end of 2026. This is an important provision that helps businesses optimize their tax obligations in the short term while ensuring full compliance with current legal regulations.
According to Article 6.6 of Resolution No. 107/2023/QH15, the additional tax amount is considered zero if it meets the criteria for revenue, profit, or simple effective tax rate based on national reporting (CbCR). This allows businesses time to prepare their data systems.
| Criteria | Detailed description |
| Small revenue threshold | Revenue under 10 million EUR and profit under 1 million EUR |
| Simple tax rates | The actual tax rate reaches the minimum threshold (15% – 17%) |
| Normal profit | Profit is lower than income based on assets and labor. |
The application of the simplified calculation method in Article 6.7 of Resolution No. 107/2023/QH15 helps reduce complex adjustment procedures. Therefore, businesses need to proactively review data to correctly apply incentives during this transitional period.
Parent company responsibilities and technical regulations
Resolution No. 107/2023/QH15 clearly stipulates the role of the ultimate parent company and intermediate parent company in Vietnam in declaring and paying IIR taxes for its overseas member units. This expands the scope of Vietnam's tax management over international investment flows.
Technically, Resolution No. 107/2023/QH15 requires the payment of taxes to the central budget (Article 6.4). The exchange rate used is the average of the central exchange rate in December of the preceding year. Furthermore, Article 6.8 allows for offsetting taxes already paid to avoid double taxation on foreign income.
Conclude
Resolution No. 107/2023/QH15 is not only a tax regulation but also a tool to affirm Vietnam's position in the international tax system. Understanding the revenue limits, tax rates, and transitional provisions is a prerequisite for FDI enterprises to maintain compliance and optimize operating costs from 2024 onwards.
To support your business in overcoming legal challenges, MAN – Master Accountant Network provides in-depth auditing and tax accounting services. We are committed to helping businesses review the impact of Resolution No. 107/2023/QH15, ensuring legal safety and optimizing sustainable benefits. Contact MAN today for the most professional advice!
Service contact information at MAN – Master Accountant Network
- Address: No. 19A, Street 43, Tan Thuan Ward, Ho Chi Minh City
- Mobile/Zalo: 0903 963 163 – 0903 428 622
- Email: man@man.net.vn
Content production by: Mr. Le Hoang Tuyen – Founder & CEO MAN – Master Accountant Network, Vietnamese CPA Auditor with over 30 years of experience in Accounting, Auditing and Financial Consulting.
Frequently Asked Questions about Resolution No. 107/2023/QH15
According to Resolution No. 107/2023/QH15, the corporation must have consolidated revenue of 750 million EUR or more for at least two consecutive quarters.
No later than 12 months after the end of the fiscal year as stipulated in Article 6.1 of Resolution No. 107/2023/QH15.
Yes, Article 6.8 of Resolution No. 107/2023/QH15 allows for offsetting additional taxes already paid when determining corporate income tax corresponding to foreign investment income.
According to Article 6.4 of Resolution No. 107/2023/QH15, the additional corporate income tax must be paid entirely into the central budget.
Article 6.5 of Resolution No. 107/2023/QH15 stipulates that the average central exchange rate of December of the year immediately preceding the year in which the income is generated, as announced by the State Bank of Vietnam, shall be used. What is the applicable revenue threshold?
What is the deadline for paying the QDMTT tax?
Is tax offsetting possible?
To which level of government budget do businesses pay additional income tax?
According to Article 6.4 of Resolution No. 107/2023/QH15, the additional corporate income tax must be paid entirely into the central budget.
